You should just have to replace SyncFriends.lua after checking it out.

Sorry, this wasn't clear enough:
If you just use a bare SyncFriends SVN checkout, you will not have translations. If you wish to test the fix with your existing v1.3 translations, you may just overwrite SyncFriends.lua from your 1.3 addon with the one from SVN.

Could you try with the latest svn revision ? You should just have to replace SyncFriends.lua after checking it out. I don't expect my changes to actually solve the issue, but they should help identifying the cause. The error message should mention the name of the friend it's trying to set a note for, or even the friend number SetFriendNotes is called for. (Boy, is that API inconvenient...).

Disclaimer: I didn't run my changes on WoW after writing them. They are simple enough to be very-likely-correct, but I don't have an active WoW account for several months now.
Also, my changes pass FindGlobals checks, so at least they are valid LUA and there should not be any variable name typo.